Company Overview - Modine is a diversified global leader in thermal management technology and solutions, with over 100 years of experience in solving thermal management challenges for mission-critical applications [3] - The company is headquartered in Racine, Wisconsin, and operates in North America, South America, Europe, and Asia, employing more than 11,000 people worldwide [3] - Modine's purpose is to engineer a cleaner, healthier world, focusing on evolving its portfolio to provide the latest heating, cooling, and ventilation solutions [3] Upcoming Event - Modine will participate in the William Blair 45th Annual Growth Stock Conference on June 4, 2025 [1] - The presentation will be led by Neil D. Brinker, President and CEO, and Michael B. Lucareli, Executive Vice President and CFO, scheduled for 12:40 p.m. Central time (1:40 p.m. Eastern Time) [2] - A live webcast of the presentation will be available on Modine's Investor Relations website, with recordings accessible for 90 days post-event [2]

Core Viewpoint - Modine Manufacturing Company has entered into a definitive agreement to acquire L.B. White Company, LLC for an enterprise value of $112 million, with the transaction expected to close on May 31, 2025 [1] Company Summary - The acquisition of L.B. White Company, LLC is valued at $112 million, indicating a strategic move by Modine Manufacturing Company to expand its portfolio [1] - The transaction is subject to customary closing conditions, which is standard practice in mergers and acquisitions [1] - The expected closing date for the transaction is May 31, 2025, suggesting a timeline for integration and operational planning post-acquisition [1]

Core Viewpoint - Modine has announced the acquisition of L.B. White to diversify its HVAC offerings, particularly in portable and agricultural heating solutions, with the transaction expected to close on May 31, 2025 [1][2]. Company Overview - Modine is a global leader in thermal management technology, with over 100 years of experience in providing heating solutions [3][4]. - The company operates in various segments, including Climate Solutions and Performance Technologies, and employs over 11,000 people worldwide [4]. Acquisition Details - The acquisition of L.B. White is based on an enterprise value of approximately $112 million, with L.B. White expected to report revenue of $73.5 million for fiscal 2025 [3]. - The acquisition is anticipated to be immediately accretive to earnings and is expected to generate incremental growth and cost savings through synergies and the application of Modine's 80/20 operating model [3]. Strategic Alignment - The acquisition aligns with Modine's strategy to expand its portfolio with complementary technologies that address unique climate requirements in various end markets [2][3]. - L.B. White is recognized for its specialized heating technology, holding a market-leading position in swine and poultry agriculture heating in North America and being a top player in portable heating solutions [2][3].

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Financial Performance - Fiscal 2025 net sales increased by $175 million, or 7%, primarily due to higher sales in the Climate Solutions segment [168]. - Fiscal 2025 net sales reached $2,583 million, a 7% increase from the prior year, driven by a $333 million increase in the Climate Solutions segment [173]. - Gross profit for fiscal 2025 increased by $118 million, with gross margin improving by 310 basis points to 24.9% [168]. - Operating income for fiscal 2025 was $283 million, up $42 million from the previous year, primarily due to higher gross profit [178]. - SG&A expenses increased by $58 million in fiscal 2025, attributed to higher compensation-related expenses and costs from acquisitions [168]. - SG&A expenses rose by $58 million, or 21%, in fiscal 2025, with compensation-related expenses accounting for a significant portion of the increase [176]. - The cost of sales for fiscal 2025 was $1,940 million, a 3% increase, but as a percentage of sales, it decreased to 75.1% [174]. - Interest expense increased by $2 million in fiscal 2025, primarily due to higher borrowings related to acquisitions [179]. - The provision for income taxes in fiscal 2025 was $69 million, reflecting an increase due to higher earnings compared to the prior year [180]. Segment Performance - Climate Solutions segment sales rose by $333 million, or 30%, driven by increased demand for data center cooling and HVAC&R products [155]. - Performance Technologies segment sales decreased by $158 million, or 12%, primarily due to lower sales volume, including $54 million from sold automotive businesses [159]. - Climate Solutions segment operating income for fiscal 2025 was $248 million, an increase of $69 million from the prior year [196]. - Performance Technologies net sales decreased by $158 million, or 12%, in fiscal 2025, primarily due to lower sales volume and a $54 million impact from the disposition of three automotive businesses in Germany [205]. Acquisitions and Business Strategy - The company acquired Scott Springfield Manufacturing for $184 million and AbsolutAire, Inc. for $11 million, enhancing its product portfolio in the Climate Solutions segment [161][166]. - The company plans to exit its automotive business to focus on higher-margin technologies, expecting improvements in profit margins and cash flows [145][162]. - The company is expanding its production capacity and global footprint, including a new facility in India to support data center cooling solutions [156]. Operational Efficiency - The company is applying 80/20 principles to enhance operational efficiency and profitability across its segments [151]. - Restructuring expenses in fiscal 2025 increased by $13 million, primarily due to higher severance expenses and product line transfer costs [177]. - Operating income decreased by $4 million to $108 million in fiscal 2025, primarily due to higher restructuring expenses [210]. Cash Flow and Debt Management - Net cash provided by operating activities in fiscal 2025 was $213 million, a decrease of $2 million from the prior year [219]. - Capital expenditures in fiscal 2025 totaled $84 million, with $30 million allocated to the Performance Technologies segment [221]. - Total debt outstanding decreased by $81 million to $351 million at March 31, 2025 [223]. Pension and Liabilities - Goodwill totaled $234 million as of March 31, 2025, with impairment tests indicating no impairment [234]. - The company has global pension liabilities totaling $30 million as of March 31, 2025, with significant assumptions including a discount rate of 5.4% for fiscal 2025 [236][240]. - The expected rate of return on pension plan assets was 5.5% for fiscal 2025, with a potential impact of less than $1 million on pension expense for a 25 basis point change [239]. - The company approved the termination of its primary U.S. pension plan, expected to complete during fiscal 2026, with benefit obligations measured on a settlement liability basis [237]. Market Risks and Opportunities - Approximately 50% of the company's sales were generated in countries outside the U.S. in fiscal 2025, with foreign currency exchange rate changes unfavorably impacting sales by $18 million [258]. - The company faces market risks including inflation, energy costs, and supply chain challenges, which could impact financial performance [247]. - The company emphasizes the importance of technological advances to differentiate from competitors and drive sales growth, particularly in data center cooling and electric vehicles [247]. - The company is pursuing new market opportunities in data centers, indoor air quality, and Gensets, which are subject to technological and market acceptance risks [271]. Risk Management - The company actively monitors customer financial conditions and adjusts pricing strategies to mitigate risks associated with price reductions from customers [269]. - The company is exposed to supply risks for raw materials such as aluminum, copper, and steel, and engages with suppliers to ensure availability [264]. - The company seeks to mitigate commodity price risk by adjusting product pricing in response to raw material price increases, which typically lag by three months or longer [263]. - The company maintains cash and short-term deposits with reputable financial institutions to manage credit risk [267]. - The company has retained outside advisors for managing pension assets, focusing on downside risk protection [267]. - The company is subject to economic risks from geopolitical uncertainties and market downturns, impacting its diverse customer base [270].

Financial Data and Key Metrics Changes - The company reported a 7% increase in sales for the fourth quarter, driven primarily by growth in the Climate Solutions segment [22] - Adjusted EBITDA increased by 32% or $25 million, with an adjusted EBITDA margin of 16.1%, representing a 300 basis point improvement from the prior year [23] - Full year adjusted EBITDA margin ended at 15.2%, which is 210 basis points above fiscal 2024 [24] Business Line Data and Key Metrics Changes - Climate Solutions segment reported a 30% increase in revenues and a 45% increase in adjusted EBITDA, resulting in a 220 basis point improvement in adjusted EBITDA margins to 21% [7][16] - Performance Technologies segment achieved a 15% adjusted EBITDA margin in the fourth quarter, with a 200 basis point year-over-year improvement [12][19] - Data center sales grew by $69 million or 80% from the prior year, driven by higher North American sales and the Scott Springfield acquisition [16] Market Data and Key Metrics Changes - North America showed strong demand for chillers, with data center sales primarily driving growth [8][10] - The European market is experiencing a downturn, with some projects being delayed due to changing technologies and economic conditions [52][54] - The company anticipates total sales growth of 2% to 10% for fiscal 2026, with Climate Solutions expected to grow 12% to 20% [29][30] Company Strategy and Development Direction - The company is focusing on expanding its Climate Solutions segment and has made significant investments to drive growth [5][6] - A reorganization of the Performance Technologies segment into two product groups aims to streamline operations and improve margins [13][31] - The company is actively pursuing bolt-on acquisitions to enhance its product offerings and market presence [11][57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the data center market, with visibility into customer plans extending up to five years [39][40] - The company is navigating challenges related to tariffs and supply chain issues but believes its local for local strategy mitigates risks [42][28] - Despite uncertainties in the market, management remains optimistic about achieving fiscal 2026 targets, including adjusted EBITDA in the range of $420 million to $450 million [32] Other Important Information - The company generated $27 million of free cash flow in the fourth quarter, with full-year free cash flow at $129 million [25] - A $100 million stock buyback program was announced, with $18 million of share repurchases completed [26] - The company is on track to launch production in India in Q2, aiming to service Southeast Asia and the Middle East [10] Q&A Session Summary Question: Data center visibility and build schedules - Management indicated strong confidence in data center opportunities, with visibility extending up to five years for some customers [39][40] Question: Tariff impacts and sourcing from China - The company has significantly reduced dependency on Chinese supply chains and feels comfortable with its local for local strategy [42] Question: Demand uncertainties in Performance Technologies - The largest uncertainty is the rate of market recovery, particularly in agricultural and construction sectors [43] Question: Data center demand in North America vs Europe - North America is experiencing strong demand, while Europe is seeing some downturn due to technology adjustments [52][54] Question: M&A activity and strategic exits - The company is confident in executing at least one acquisition in the near term and is focused on divesting non-strategic automotive businesses [57][58]

Financial Data and Key Metrics Changes - The company reported a 7% increase in sales for the fourth quarter, driven primarily by growth in the Climate Solutions segment [21] - Adjusted EBITDA increased by 32% or $25 million, with an adjusted EBITDA margin of 16.1%, representing a 300 basis point improvement from the prior year [22] - Full year adjusted EBITDA margin ended at 15.2%, which is 210 basis points above fiscal 2024 [23] Business Line Data and Key Metrics Changes - Climate Solutions segment reported a 30% increase in revenues and a 45% increase in adjusted EBITDA, resulting in a 220 basis point improvement in adjusted EBITDA margins to 21% [7][15] - Performance Technologies segment achieved a 15% adjusted EBITDA margin in the fourth quarter, with a 200 basis point year-over-year improvement [11][20] - Data center sales grew by $69 million or 80% from the prior year, driven by higher North American sales and the Scott Springfield acquisition [15] Market Data and Key Metrics Changes - North America showed strong demand for chillers, with data center sales significantly contributing to revenue growth [8][15] - The European market is experiencing some downturn, with customers adjusting their spending plans [52] Company Strategy and Development Direction - The company is focusing on expanding its Climate Solutions segment and has made significant investments to drive growth [5][10] - A new modular data center cooling solution is being launched to meet market demands for high-density compute infrastructure [9] - The Performance Technologies segment is being reorganized into two product groups to better focus on key end markets and customers [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the data center market, with visibility of customer plans extending up to five years [38] - The company anticipates total sales growth of 2% to 10% for fiscal 2026, with Climate Solutions expected to grow by 12% to 20% [27] - Performance Technologies is expected to see sales decline by 2% to 12% due to depressed end markets [28] Other Important Information - The company generated $27 million of free cash flow in the fourth quarter, with full year free cash flow at $129 million [24] - A $100 million stock buyback program was announced, with $18 million of share repurchases completed [25] Q&A Session Summary Question: Can you discuss data center visibility and customer build schedules? - Management indicated strong confidence in data center opportunities, with visibility extending up to five years for some customers [36][38] Question: Is there anything sourced from China that is hard to find elsewhere? - The company has significantly reduced dependency on China and feels comfortable with its local supply chain strategy [40] Question: What is the outlook for Performance Technologies? - The largest uncertainty is the rate of market recovery, particularly in Performance Technologies, while Climate Solutions is expected to grow steadily [41] Question: Can you clarify the split in data center revenue between the US and Europe? - The split is approximately 75% North America and 25% Europe [64] Question: How will data center revenue ramp up in fiscal 2026? - The first quarter is expected to be the softest, with ramp-up occurring throughout the year as capacity increases [66] Question: What is the growth outlook for Climate Solutions? - Data center revenue is expected to grow by at least 30%, while other areas may see flat or low double-digit growth [70] Question: What are the plans for divestitures in the Performance Technologies segment? - Currently, no divestitures are built into the guidance, but the company is focused on exiting non-strategic businesses [78]

Financial Performance - Modine achieved a third consecutive record year, driven by strong Q4 performance[7] - Net sales for FY25 reached $25835 billion, up from $24078 billion in FY24[5, 27] - Adjusted EBITDA for FY25 was $3921 million, compared to $3143 million in FY24[5, 28] - Adjusted EPS grew by 45% due to higher earnings in Q4 FY25[19] - Free cash flow for FY25 was $129 million[20] Climate Solutions Segment - Climate Solutions saw a 30% increase in revenues and a 45% increase in adjusted EBITDA in FY25[10] - Data center revenue increased by 119% to $644 million, including $197 million from the Scott Springfield acquisition[10] - Climate Solutions net sales in Q4 FY25 were $3563 million, an 80% increase in Data Centers sales[15] - Adjusted EBITDA margin for Climate Solutions in Q4 FY25 improved by 290 bps to 214%[15] Performance Technologies Segment - Performance Technologies net sales for FY25 were $11635 billion, down from $13213 billion in FY24[12] - Adjusted EBITDA for Performance Technologies in FY25 was $1572 million, compared to $1524 million in FY24[12] - Performance Technologies Q4 FY25 sales decreased by 12%[16] - Adjusted EBITDA margin for Performance Technologies in Q4 FY25 increased by 220 bps to 150% due to improved operating efficiency[16] Fiscal Year 2026 Outlook - The company anticipates revenue growth of 2% to 10%, projecting net sales between $264 billion and $284 billion[23, 24] - Adjusted EBITDA is forecasted to grow by 7% to 15%, reaching $420 million to $450 million[23, 24] - Climate Solutions sales are expected to increase by 12% to 20% in FY26[23]

Core Insights - Modine reported revenue of $647.2 million for the quarter ended March 2025, a year-over-year increase of 7.2% and a surprise of +2.82% over the Zacks Consensus Estimate of $629.47 million [1] - The EPS for the same period was $1.12, compared to $0.77 a year ago, resulting in an EPS surprise of +17.89% against the consensus estimate of $0.95 [1] Financial Performance Metrics - Net Sales for Climate Solutions reached $356.30 million, exceeding the average estimate of $345.51 million from two analysts [4] - Net Sales for Corporate and eliminations were reported at -$3.90 million, better than the average estimate of -$6.20 million [4] - Net Sales for Performance Technologies amounted to $294.80 million, surpassing the average estimate of $287.88 million [4] - Adjusted EBITDA for Climate Solutions was $76.30 million, slightly above the average estimate of $75.12 million [4] - Adjusted EBITDA for Corporate and eliminations was -$16.30 million, better than the average estimate of -$17.70 million [4] - Adjusted EBITDA for Performance Technologies was $44.10 million, exceeding the average estimate of $40.54 million [4] Stock Performance - Modine's shares have returned +50.2% over the past month, significantly outperforming the Zacks S&P 500 composite's +13.1% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

分组1 - Modine reported quarterly earnings of $1.12 per share, exceeding the Zacks Consensus Estimate of $0.95 per share, and up from $0.77 per share a year ago, representing an earnings surprise of 17.89% [1] - The company achieved revenues of $647.2 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.82% and increasing from $603.5 million year-over-year [2] - Modine has consistently surpassed consensus EPS estimates over the last four quarters, indicating strong performance [2] 分组2 - The stock has underperformed the market, losing about 10.2% since the beginning of the year, while the S&P 500 has gained 1.4% [3] - The current consensus EPS estimate for the upcoming quarter is $1.12 on revenues of $671.07 million, and for the current fiscal year, it is $4.55 on revenues of $2.72 billion [7] - The Automotive - Original Equipment industry, to which Modine belongs, is currently ranked in the bottom 39% of Zacks industries, suggesting potential challenges ahead [8]